Knowledge Gap in Applying Philippine Accounting Standard 2 (Inventories) Across Manufacturing Concerns in the Southern Manila District

Abstract

Philippine Accounting Standard (PAS) 2 governs the valuation and presentation of inventories, a crucial line item in the financial statements of manufacturing businesses. Despite the established framework, manufacturing firms in the Southern Manila District face challenges in implementing the standard, leading to discrepancies in financial reporting. This study examines the expectation gap between the perceived application and actual compliance of these businesses with PAS 2, particularly in inventory valuation and disclosure. Employing a quantitative approach, the study utilizes statistical analysis to assess discrepancies based on employees' academic attainment, job titles, and work experience. The findings reveal a significant knowledge gap in the application of PAS 2, indicating that while employees may understand the theoretical principles, practical implementation remains inconsistent. However, compliance with disclosure requirements appears to be better understood, suggesting that firms prioritize regulatory reporting over valuation accuracy. The study highlights the necessity of enhanced training programs and stricter regulatory oversight to bridge this knowledge gap and improve adherence to PAS 2. Strengthening compliance measures can lead to more accurate financial reporting, fostering transparency and informed decision-making within the manufacturing sector. By identifying key areas of misunderstanding and implementation challenges, this research provides valuable insights for policymakers, regulatory bodies, and industry stakeholders aiming to enhance financial reporting standards in the Philippines.